KR
The Kroger Co.
$57.78
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 24.7% above fair value
You pay
$57.78
Bear
$38.61
Fair
$46.34
Bull
$54.06
Bear
$38.61
-33.2%
$2.96 × 10x P/E
Fair
$46.34
-19.8%
$2.96 × 12x P/E
Bull
$54.06
-6.4%
$2.96 × 14x P/E
Key Value Driver
Normalized P/E multiple (12x base case)
Implied Market Multiple
19.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $71.58 from 44 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $46.34 per share.
Warnings
The company's reported profits differ from official accounting profits by 92%. Check what costs are being left out of the adjusted number.
The company pays out 94% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $71.58 (from 44 analysts). Our estimate is 50% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples